Friday, November 24, 2023

My 11.21.23 Meeting Summary

The Council met on 11.21.23 to discuss one significant item.  I had a planned trip so I was unable to attend, however I returned and watched the video of the meeting.

- The Council received the quarterly report on the City's investment Portfolio for the as of 9.30.23.  The City's portfolio of investments consists of approximately $14.5M primarily in CDs, US Treasuries, and other State investment pools.  Beginning this year the City has been shifting away from CDs as they mature and moving more into US Treasuries as CDs tend to be more illiquid which is not consistent with our Investment Policy.

During the meeting both Councilmember Tillman and our City Manager expressed an interest in investing in corporate debt ostensibly due to potentially higher yields. This was after repeating the mantra that staff are not hedge fund managers - the same comment made when the Budget and Audit Committee (myself and Councilmember Trupiano) pushed staff to move towards US Treasuries for the purposes of liquidity and yield.  US Treasuries are one of the simplest investments to make.  As such, it seems odd that when it comes to corporate debt there was no similar concern raised.  

More on point, the Committee earlier this year made updates to the City's Investment Policy and one of the changes was to remove corporate debt as an available investment option.   This was because the top priority of the City's Investment Policy is safety - we purposely give up yield in order to safeguard the assets of the City and the taxpayers.  And while some may contend that corporate debt is virtually as safe as an investment in US Treasuries, and that corporate debt can be highly rated by all of the rating agencies, I'm reminded of the fact that immediately before Enron declared bankruptcy their corporate debt was also highly rated.

Earlier in the month the Budget and Audit Committee met and provided feedback to staff on the same report received at the 11.21.23 meeting.  The Committee requested that the City make available the monthly statements from UBS in order to view the transactions and more detailed information about the holdings of the City.  This will be added to the City's website going forward on a monthly basis.